Archive for March 2011

Allow me to pose a question to you: How successful in terms of gross gaming revenues do you think the poker rooms and sports books are to a casino? I’m sure unless you have a pretty good understanding of the casino industry, you’d think they were pretty good money-makers huh? WRONG. I myself just learned how wrong of a statement that is. As of December 2010, gross gaming revenues in Nevada were right around $10.5 billion. Slots accounted for about 60% of that, no surprise there. Card games (poker), race and sports betting revenues combined came in right around 3% of total GGRs. Ok, you might be saying to yourself, there are always small money-making segments in any business.

MGM Grand Sports Book

And don’t get me wrong, I don’t think that casinos could do without these facilities. In fact, a casino without a sports book or poker room would probably be seen as an incomplete property and would likely not do well. What mind-boggles me is the fact that these are always the places in the casinos that suck up the most money for the least return. Whether it be new renovations to compete with the guy down the street, or the fanciest televisions, or the newest technology, poker rooms and sports books tend to be very nice in terms of how much money they actually make for a casino. So, why would casinos, especially in a market like the one we are in now, spend millions of dollars on facilities that only drive 3% of revenues? I posed this question to a gaming professional,

Bellagio Sports Book

and the response I received was sad but true, “big boys like big toys.” Usually, and unfortunatly, this is a matter of ego. It’s a race to outdo the competitors. And for what? Poker rooms and sports books usually attract “wise guy” types – always looking for the best deal and ways to beat the house. These players generally speaking do not actually turn around and spend their money elsewhere in the casino, usually due to the fact that they think slot machines are for suckers and ladies. All of this for 3% of the revenue. Casinos are spending time cutting back in all areas due to the economy. Give away less money. Give away less comps, or in the more recent case of a Las Vegas casino – recind comp offers from actual gaming guests. However, all kinds of money is being pumped into remodels of poker rooms and sports books for 3% of gaming revenue. To me, this makes no sense.

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Yep, I’m going to talk about Internet Poker again. But hey, it’s a really hot topic in the gaming world right now. So, here’s a quick recap of the week in review:

Wynn Las Vegas entered into a partnership with PokerStars and will operate as PokerStarsWynn.com once the legislation passes. This is a BIG deal. These two companies are giants in their respective industries, and joining forces only makes them stronger as a whole. As soon as Internet Poker is “legalized,” that is to say legislated, this newly formed partnership will likely take the lead in the market. Prior to this partnership, Nevada casinos were fighting to make sure that once Internet Poker is legislated, companies like PokerStars would not be able to get licensed because they have been breaking the UIGEA law by operating in the US. The newest law, which I talked about in my last post, would not prohibit the existing online poker companies from getting licensed. This was a VERY strategic move on behalf of Wynn Las Vegas as well as PokerStars. Two major players teaming up to take over the market, which is what likely will happen.

In a less reported story, Caesars Entertainment joined up with 888 Holdings PLC, an Israeli company that offers Internet gaming options in Italy, France and the UK. This deal was approved on the same day as the Wynn/PokerStars deal was announced and it marks the first time that the Nevada Gaming Commission has allowed a casino operator to do business with a company who offers Internet gambling. The good news for Caesars in this deal is that they will be able to market it’s very strong World Series of Poker brand worldwide now across the Internet.

It seems that with these two mega-deals occurring within the same week that legislation is getting closer than ever in terms of Online Poker. At this time, Nevada should be very eager for AB258 to pass and to start regulating the industry. It means a boost in revenue for the state that is so desperate for any additional income and it will be very interesting going forward to see where this is going to go. Stay tuned, as I’m sure this is not the last of the new information I will hopefully be bringing you as this story unfolds.

As a follow-up to yesterday’s post, The Fight to Legalize Internet Poker, I found this very interesting post by David Schwartz on the Two Way Hard Three blog. The new bill, AB258, which can be read in it’s full text here, would in essence allow Nevada to legislate and operate online poker operations. The Nevada Gaming Commission would be in charge of regulating the new industry. This would include things like geographic verification of where the player is located as well as they would have to find a way to verify the player’s age. The NGC would also have to ensure the privacy of its players and have a way to guarantee the honesty of the game. The tax rate for players and games within the state would likely remain at 6.75%, and the tax rate for players and games in other jurisdictions would likely be 4%. It is uncertain at this time what kind of economic boost this would provide to the state of Nevada, but I think at this time, any economic boost would be helpful.

Another point I made in my previous post had to do with whether or not the established online poker companies could or would be granted a license in Nevada, even though they were technically breaking the federal law (UIGEA). The new bill specifically points out that unlicensed operators are not to be denied a license in Nevada for that reason alone. This part of the bill would likely draw some opposition from current casino operators in Nevada who feel that they will not be able to compete with these companies once the law is passed. In any case, it will be very interesting to see how this plays out.

There has been a long battle to legalize Internet Poker in the US. Now, you may be wondering, how do companies like PokerStars and Full Tilt Poker operate in the US? For the majority of Internet Poker sites, they operate from abroad, and their owners and operators usually end up choosing not to enter US borders, in case they are arrested and prosecuted under the Unlawful Internet Gambling Enforcement Act (UIGEA) which was passed in 2006. Other companies choose to operate under the assumption that they will not be prosecuted, because the law is hard to interpret in terms of who is gambling and where they are located. Senator Reid has been a champion of an Internet Poker Bill for many years and attempted to push through an Internet Poker bill during the lame duck session in December 2010, which ended up failing. But that wasn’t the end of the fight to legalize Internet Poker. Senator Reid is still trying to get a law in place that would make Nevada the regulators for the new industry. But some large casino companies such as Wynn Las Vegas and Caesars Entertainment are also involved in the fight. They are hesitant for Internet Poker to be legalized without some serious thought into what to do with existing companies. Obviously, if Internet Poker were legalized in Nevada, the big casino players would immediately want to be involved. Especially Caesars, with its World Series of Poker brand being very strong in the Poker world. However, it would be nearly impossible for these companies to enter a market that already has such saturation. The main point the casinos are trying to get across is that the existing companies must be excluded from being able to run their existing sites, citing that they have been breaking the law for years and should not reap any of the benefits of legalization. The big casino companies need a period of time after legalization to figure out how to run Internet poker sites effectively, which sites like PokerStars and Full Tilt have already mastered. Also, in terms of customers, there would be no reason for loyal PokerStars players to try out a Wynn Las Vegas brand of Internet Poker when they are already part of an established site. In any case, this fight is far from over and it will be interesting to see how it plays out.

What are your opinions on the legalization of Internet Poker? Pros and Cons for the State of Nevada? The US?

Change is good, even if you might be averse to it. I was sitting in a meeting the other day for a non-profit organization. The organization is going through some changes due to the problems with the economy. A new board member gave a presentation about what he felt was going wrong in the organization from what he has witnessed and researched in his short time with them. He had some amazing ideas! But the whole time I was sitting there listening, I was noticing that some of the lifetime board members had looks on their faces like they were being invaded. In a sense, they are being invaded, but its a GOOD thing. It’s important sometimes to sit back and listen to the new ideas of someone else, taking into consideration that they are just trying to help you. What I’ve noticed in the two years that I have been involved, is that this organization and its leaders have a hard time getting out of their own way. It’s all about the “way we’ve always done it,” rather than the way we should do it going forward. For example, they’ve been used to large sponsorships and donations in the past, upwards of $10-20k. Unfortunately, this is just not a realistic goal anymore. Companies are not shelling out money like they used to for charitable causes. Instead, the new idea involved seeking out multiple smaller donations, more along the lines of $1-2k. Ten of those would equal the $10k donation they used to get. But, they’ve never done it that way, so I think it scares people to try something new when the norm has been the norm for 10-15 years. The moral of the story is, change is good. It’s so important to have an open mind and give someone else the opportunity to have a good idea now and again. It might actually end up helping you in the end!

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I just read an article on VegasChatter.com about a pretty cool new perk that Caesars Entertainment is now offering to certain members of meetings/conventions that come to their Las Vegas properties. They are giving certain meeting/convention members temporary Diamond Cards, one of the higher level of cards in their Total Rewards Program. Some of the perks of having a Diamond card include priority hotel check-in, access to exclusive VIP lounges, priority service at restaurants, clubs and valet to name a few. It allows people who spend money at the property on things other than gaming to enjoy some of the same benefits.

To me, this makes perfect sense! Why not reward non-gaming customers for the revenue that they are pumping into your property? Their money is just as good as the gamblers, and there is NO chance of the meeting planner getting his money back. Casinos are hurting for gaming revenue, and most of the time the perks that come with higher level gaming cards don’t cost the property any money.

Allowing people priority access to restaurants, clubs and valet service = $0.

Allowing priority hotel check-in = $0.

Ensuring that meetings and conventions will keep bringing their business back year after year = priceless.

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Clearly I am very new at this whole blogging phenomenon, so I’m always looking for advice and helpful hints on how to be a better blogger and how to drive more traffic to my blog. After all, I’m not just writing a blog so I can read it, I’m hoping that I provide good enough content and fresh enough ideas to drive traffic to my blog. So, I found an interesting article posted on Problogger.net, written by guest blogger Jeremy Myers that includes five helpful tips on how to be a better blogger.

1. Read your own blog – When you are done posting your blog, you should always re-read it to make sure everything flows and makes sense. Also, make sure to always read and respond to all comments by your readers. People comment on blogs because they have something to say. You should read and respond to every comment, regardless of how many comments you generate.

2. Read your readers’ blogs – When people comment on your blog, you should always click over to their blogs and read and comment on them. By reading and commenting on other people’s blogs, you can generate more traffic and comments to your own blogs, as well as you can find out what other people are writing about.

3. Comment on other blogs – In addition to reading and commenting on your readers’ blogs, you should go out and comment on other blogs. Problogger suggests commenting on at least 5 other blogs per day, but I find that to be a little excessive. At this point in time, I have been regularly commenting on 3 or more blog posts per week. I have seen some increase in traffic on my website, but I need to start branching out and finding new blogs. If you comment enough on someone’s blog, they might end up adding you to their blogroll, which can generate even more traffic in the future.

4. Repost excerpts from the blogs of others – When you read a good post, you should always post at least an excerpt and link back to that person’s blog. Pretty much exactly what I’m doing right now! I enjoyed this post by Problogger, so I’m summarizing and I linked back to the homepage and the blog post page. By doing this, you open the door for bloggers to post guest posts on your blog and might mention in their own blogs that you re-posted, which again, will drive more traffic to your blog.

5. Repost the comments of others – If you happen to find a good comment thread on a blog, write a post about it and include the actual comments. People who comment want to be read, and will appreciate the fact that someone is reading and replying to their comments.

In summary, it seems that blogging is a game of “you scratch my back, I’ll scratch yours.” Of course you need the content to back it up, but if you are a courteous blogger and commenter, you can in turn drive traffic and comments to your own blog. I know I always appreciate it when I post a comment on someone’s blog and I receive a response. Even a simple “thank you” lets your readers/commenters know that you appreciate and care enough to acknowledge the time they took to comment.

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About Me

This blog is devoted to the gaming industry news and information - keeping you up to date on the happenings in the gaming world. My personal expertise lies in event planning and entertainment in casinos.

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